By: Saurabh Arora, Consultant in the Digital Consulting and Advisory team

Insurers have always been conservative adopters of the new technology and innovation. It is no different with distributed ledger technology, as it has concerns over the flexibility, scalability, and RoI. With Banking Industry prepared to surpass the adoption stage this year, it is time for insurers to learn from the banks and leverage this technology to optimize operations and improve customer experience. Insurers won’t have to wait for the consortium to be built to realize the benefits of Blockchain since there are many use cases that insurers can experiment on their own.
Observing the trend that most customers do not claim their travel insurance for delayed flights in UK, the team InsurEth came up with the solution of flight travel insurance on Ethereum Blockchain platform in the Blockchain Hackathon event held in 2015. The benefit of this use case on Blockchain is not only automation, but also improved customer experience that leads to increase in net promoter score. Blockchain brings down the cost of claim processing and makes the whole process digital.

LTI’s Blockchain practice has been working on the below use cases for our global clients-

Travel Insurance:
A customer buys a travel insurance policy. The details of the policy are stored on the Blockchain. The policy terms and conditions are written in the smart contract. Smart contract gets the data feeds from the trusted flight status through Application Program Interfaces (APIs) via oracles. Based on the flight status, such as delayed or cancelled, the smart contract triggers the payment to the digital wallet of the customer.

Life Insurance:
​Lapse​d Policy – Blockchain can very well be applied to the life insurance industry. Let us consider the example of lapsed policy. Generally, customers do not claim the matured policy which thereby gets lapsed. Blockchain enables automation in this case too. A smart contract that has details of the policy such as type, maturity date, and maturity amount triggers the payout of the policy on the maturity date, without the need of customer claiming for the policy.

Term Insurance​- The second one is the auto payout to the beneficiary upon death of the insured. The smart contract has the policy details. The data from the trusted government sources about the death of the insured is fed to the smart contract via oracles. This data triggers the smart contract, which in turn, pays out to the beneficiary of the policy.

​Dynamic Pricing- ​When Internet of Things (IoT) marries the Blockchain, there are great business benefits. The classic example of this is – dynamic pricing in insurance. The real-time data is fed into the smart contract from the APIs of wearables. This data is then used to fix the price of the insurance. The decision making of the pricing is coded in the smart contract that automatically deducts the premium from the digital wallets of the customers on the Blockchain.

Micro Insurance :
Insurance products such as weather insurance of crops can leverage Blockchain for automation of payouts. When the crop is damaged by weather events such as cyclone, heavy rainfall, drought, or typhoon, the data from the trusted weather APIs is fed into the smart contract, which thereby triggers the payment to the policy holder. Automation will help insurers save claim processing costs, and decrease the turnaround time of claim processing. ​

​Auto Insurance:
​Blockchain puts customer in control and increases transparency in the auto insurance. An accelerometer or an IoT device can be used to detect collision of the vehicle. This sends trigger to different departments of the insurer and the service provider. The customer gets a notification about the available service providers. The service provider assesses the damage and uploads a quote on the Blockchain. Upon approval of the quote by the insurer, the service provider repairs the vehicle and hands it over to the customer. Blockchain removes the paper-driven process, increases the turnaround time, and enables Omni-channel customer experience.